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ISIS Says It's Behind Nightclub Massacre as Manhunt Intensifies; Trump: North Korean Nukes Able to Hit U.S. "Won't Happen"; Dems Threaten to Stall Action on Trump Nominees; Trump Praises Dubai Business Partner at New Year's Eve Party. Aired 6-7p ET

Aired January 2, 2017 - 18:00   ET



WOLF BLITZER, CNN ANCHOR: Happening now: casting doubt. President- elect Donald Trump says he knows a lot about hacking and claims to have inside information about political cyber-attacks that he will reveal soon. Why is Trump still not convinced Russia was behind the online election meddling?

Terrorist manhunt. The search intensifies for the shooter behind a deadly New Year's attack at an Istanbul nightclub. Now ISIS is claiming responsibility. Did it inspire the massacre or direct it?

Business or pleasure? Donald Trump lavishes praise on a Dubai business partner during a New Year's Eve speech at Trump's Florida resort, raising new concerns about potential conflicts of interest. You're going to hear the recording.

And missile threat. North Korea warns of an imminent new test for a rocket that could threaten the United States. How soon before the Kim Jong-un regime can attach a nuclear warhead to that missile?

We want to welcome our viewers in the United States and around the world. I am Wolf Blitzer. You are in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We begin with breaking news. The gulf between president- elect Donald Trump and the U.S. intelligence community on Russian election hacking is growing tonight.

Trump is casting fresh doubt on the conclusion of the intelligence agencies that Russia is responsible, and he claims to have inside information about the cyber-attacks that he says he will reveal this week after he meets with intelligence officials.

Many of those same officials are more confident than ever that Moscow was behind the hacks on targets including the Democratic Party and Hillary Clinton's campaign chairman. Sources tell CNN that so-called digital fingerprints implicate Russia.

Also, concerns about Donald Trump's potential conflicts of interest as president are being fueled tonight by a recording obtained exclusively by CNN. It captures the president-elect speaking at a New Year's Eve celebration and lavishing praise on his Dubai business partner, highlighting the tangled ties he will face in the Oval Office.

And new tonight, ISIS is now claiming responsibility for the New Year's Eve's shooting massacre that left at least 39 people dead at an Istanbul nightclub. An intense manhunt is under way for the suspect who was captured on surveillance video.

We're covering all of that and much more this hour with our guests, including a key member of the House Foreign Affairs Committee, Congressman Lee Zeldin. And our correspondents and our expert analysts are also standing by.

Let's begin with the divide between Donald Trump and the U.S. intelligence community over Russian election cyber-meddling.

Jessica Schneider is over at Trump Tower in New York City for us.

Jessica, Trump claims to have some special information about all of this. What do we know?

JESSICA SCHNEIDER, CNN CORRESPONDENT: Yes, that's right, Wolf. The president-elect revealing that he knows things that others don't -- those are his words -- when it comes to the intelligence into those hacks during the election, but Donald Trump not revealing much more than that, at least not yet.


SCHNEIDER (voice-over): Donald Trump is ringing in the new year, continuing to cast doubt on U.S. intelligence pointing to Russia as the culprit of campaign hacks during the election.

DONALD TRUMP (R), PRESIDENT-ELECT: I know a lot about hacking, and hacking is a very hard thing to prove. So it could be somebody else. And I also know things that other people don't know. And so they cannot be sure of the situation.

SCHNEIDER: Trump refusing to elaborate on what insider information he has, only promising to reveal more after his meeting later this week with intelligence officials. Incoming Press Secretary Sean Spicer, though, tempering expectations about what the president-elect might make public.

SEAN SPICER, INCOMING WHITE HOUSE PRESS SECRETARY: He is going to talk about his conclusions and where he thinks things stand. So, he's not going to reveal anything that was privileged or shared with him classified. But one thing I think is missing from this discussion, Alisyn, is this report that everyone keeps talking about is not final.

The president -- the current president of the United States hasn't seen a final report. The intelligence community is talking about wrapping it up later this week.

SCHNEIDER: Spicer also questioning whether the sanctions the Trump team previously called symbolic were overblown. The Obama administration expelled 35 Russian diplomats and shuttered two Russian compounds on Long Island and in Maryland to retaliate against alleged Russian interference in the election.

SPICER: The question is, is the response of this administration, the sanctions they put on, proportional with the activities that have happened? And, number two, is it a political response so Russia, or is it a diplomatic response?


SCHNEIDER: Candidate Trump certainly acknowledged and even seemed to egg on Russia hackers during the election, inviting them to break into Hillary Clinton's computers.

TRUMP: Russia, if you're listening, I hope you are able to find the 30,000 e-mails that are missing. I think you will probably be rewarded mightily by our press. Let's see if that happens. That will be next.

SCHNEIDER: Hacked e-mails from the Democratic National Committee and Clinton campaign chair John Podesta trickled out throughout the campaign, exposing criticism against Clinton by her own staff and revealing some of the topics of her paid speeches to Wall Street bankers.

Many Democrats blame Russia hacking in part for Clinton's loss. Donald Trump once again evoking the election, closing out 2016 with this contentious tweet: "Happy new year to all, including to my many enemies and those who have fought me and lost so badly they just don't know what to do. Love."

But today Trump hardly turned over a new leaf, starting the new year with new boasts about the November election, tweeting: "Various media outlets and pundits say that I thought I was going to lose the election. Wrong. It all came together in the last week, and I thought and felt I would win big, easily, over the fabled 270, actually 306. When they canceled fireworks, they knew and so did I."


SCHNEIDER: And Trump also taking to Twitter also to talk about the staggering crime numbers out of Chicago.

Donald Trump tweeting this: "Chicago murder rate is record-setting, 4,331 shooting victims with 762 murders in 2016. If mayor can't do it, he must ask for federal help."

Chicago Mayor Rahm Emanuel's office did respond, saying they look forward to assistance from the Trump administration, saying they are looking for the Trump team to fund summer jobs for at-risk youth and also putting a challenge to the Trump team saying they hope they will help pass meaningful gun control laws -- Wolf.

BLITZER: Yes, it's pretty shocking, 762 people murdered in the city of Chicago last year. That's more than New York City and Los Angeles combined. Pretty shocking number indeed. All right, Jessica, thanks very much. We are learning new information also tonight about why U.S.

intelligence is so confident that Russia was in fact behind those election-related cyber-attacks.

Our chief national security correspondent, Jim Sciutto, has been working the story for us.

Jim, you are learning more about some of the actual evidence implicating Russia. Tell our viewers.


To be clear, the U.S. intelligence community would not have gone public with what it called a confident assessment one month before the election that Russia was behind the hacks unless it had evidence. And now learning more details about what that evidence is.

We're told by multiple officials that there are digital fingerprints in the code, in effect, of these hacks, one example being the use of Cyrillic key boards, Cyrillic, being, of course, the Russian alphabet, something you would use there and not here.

There is this impression out there that this evidence is somehow secret or murky. Just as an example, the FBI and Department of Homeland Security actually released what's in effect a schematic of exactly how the hacks were done, flow charts, et cetera. They have a code name for it, Grizzly Steppe, a name for Russian malicious cyber- activity.

A lot of the ways that this hack was carried out are now being made public in part so that companies, both private and public, can use this information to prevent acts in the future.

BLITZER: You know, it's very interesting the U.S. has identified foreign countries hacking the U.S. before, hasn't it?

SCIUTTO: No question. That's the thing here. They have done this before with confidence. You may remember in 2013 they were able to identify a specific building outside Shanghai in China where a military unit was hacking U.S. corporations, U.S. government institutions.

The Department of Justice actually issued charges for individuals there. Then, in 2014, the U.S. was able to identify North Korean hackers as being behind the hack of Sony Pictures. You will remember all those revelations. This is not the first time that U.S. intelligence, using its tools, has been able to identify a foreign country, again using these digital fingerprints that we're learning more about now as the evidence behind them now pointing the finger towards Russia for the hacks of the U.S. election.

BLITZER: Just a few moments ago, I want to get your reaction to this, Jim, because you are an expert. Donald Trump tweeted this. And I will put it on the screen. "North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the United States. It won't happen!"

Strong words from Donald Trump.

SCIUTTO: No question.

Listen, the U.S. intelligence community view is that North Korea has an untested intercontinental ballistic weapons capability, in that they put the pieces together, but they haven't shown that they can make it work, in effect.


So, there is a differing point of view. They have to assume that because they have to be prepared for it if it were to happen. The trouble is, they are making e enormous progress, at a minimum, at the short- and medium-range level, which threatens U.S. allies, South Korea, certainly, U.S. troops based there in Seoul, but Japan as well.

But the progress is undeniable. And Donald Trump is right there. It will be a severe challenge for his presidency.

BLITZER: Jim Sciutto reporting for us, thanks very much.

Let's get some more on all of this.

A key member of the House Foreign Affairs Committee, Republican Congressman Lee Zeldin of New York, is joining us.

Congressman, thanks very much for joining us.

REP. LEE ZELDIN (R), NEW YORK: Good to be here, Wolf.

BLITZER: I want to talk to you about North Korea and this latest tweet from Donald Trump in a moment. But let's get right to Russia first.

Do you believe that Russia did engage in these cyber-attacks against the U.S.?

ZELDIN: I have so much faith in our intelligence community. That has been where the large bulk of the evidence has been. There is -- the president, when he released the executive order last week, as well as the FBI and DHS putting out their report, did leave a few questions that are still unanswered.

The president indicated that Congress was going to get some intelligence forwarded to us. I am hoping that happens this week.

BLITZER: You're still not convinced, is that what you're saying?

ZELDIN: I just would like to know what President Obama says he wants to forward that he hasn't yet forwarded.

And I would like to know what president-elect Trump says that he has that he hasn't yet released. But so far everything that's been released indicates Russia is responsible. I do have a ton of faith in U.S. intelligence sources. So until I see something that contradicts it that we can move on, Russia is responsible.

BLITZER: They're excellent, the U.S. intelligence community, and their successes we often don't know much about. Their failures, like the weapons of mass destruction assessment leading up to the Iraq War, we know about that.

It's always good to be a bit skeptical, but, at the same time, you listen and you learn. Listen to what Senator John McCain said in Ukraine about the Russian involvement. Listen to this.


SEN. JOHN MCCAIN (R), ARIZONA: When you attack a country, it's an act of war. And so we have to make sure that there is a price to pay, so that we can perhaps persuade the Russians to stop this kind of attacks on our very fundamentals of democracy.


BLITZER: He is calling it an act of war. Do you agree with him?

ZELDIN: Oh, cyber-warfare is real. It is a huge threat. We need to take our cyber-security extremely seriously.

This is not just Russia. China. There are state actors. There are individual actors. This threatens the U.S. government, our infrastructure, companies. Individuals can open up an e-mail that looks like a normal e-mail. You click on a link and then all of a sudden it's getting spread out all through your company and into your other contacts in your e-mail list.

And the amount of sensitive information that has been released and can be is a threat to our security. So, absolutely, cyber-warfare is warfare. And the best defense on it is a good offense.

BLITZER: What's more appropriate right now, knowing everything you know, to go ahead and take these steps, sanctions, expelling Russian diplomats, making strong statements, or praising Putin?

ZELDIN: The key is to have a long game where we are thinking several steps ahead.

There are -- I can think of 1,000 different ways to approach our relationship with Russia. We are talking cyber-security and cyber- attacks. I just got back from Afghanistan a few days ago. You look in the Middle East with Syria and Turkey and Iran and Russia's interactions not just there, but elsewhere around the globe.

So, what we need to be able to do when we act, whether it's saying something or doing something that Putin may take as a compliment or an insult, it needs to be part of a longer strategy. You can't just fire one shot.

BLITZER: Because he did tweet this, Donald Trump. And I will put this one up on the screen. After Donald Trump -- he tweeted this after Putin decided not to retaliate by expelling American diplomats in exchange, because of what the U.S. did to the Russian diplomats.

He said this on December 30: "Great move on delay by V. Putin. I always knew he was very smart!"

Was that appropriate?

ZELDIN: Well, what would be best is if our president, our current president and our next president could get more on the same page, because when they are contradicting each other with messaging at a moment or strategy over the course of days and weeks, it doesn't help the United States.

But what is so important is -- and, by the way, Putin is a bad guy. He is not an ally of the United States. He should not be looked at as one. He is provocative. He is an aggressor. He does not have our interest. He meddles in areas where we have service members risking their lives and being put into harm's way.

But what is so important, whatever strategy we choose, is that we are anticipating Putin's response and that we know what our response to that is going to be.

BLITZER: Donald Trump never says any of those bad things about Putin.

ZELDIN: Well, if there is a strategy and there is a long game where he can find diplomatic successes in engaging with Putin where he thinks that he can make progress that can help us, if it's part of a long game that works, great.


If it's not going to work and we need a more hostile approach, over the course of eight years, President Obama in many ways was asking nicely with Russia on certain fronts.

Just over a year ago, if we wanted to negotiate a truce in Syria, we could have done so. If someone came up with the answer, you could have sat down at a table and Russia didn't need to be there. Now you can't negotiate a truce without Russia being there. Vacuums have been created.

The Russians have has filled those vacuums and certain elements of our foreign policy have become more complicated because of it. Whatever strategy our president wants to take, whether it's President Obama or our next president, with regards to Vladimir Putin, it just needs to be part of a long game and not taking one step at a time.

BLITZER: Let's talk about North Korea for a moment. All of a sudden, Donald Trump issues this threat, and I think it's fair to call it a threat. He just tweeted this. I will put it on the screen.

"North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the United States. It won't happen!"

You see that as a threat. I assume you do? ZELDIN: No doubt. He is absolutely right. That should be America's

foreign policy. That should be the world's foreign policy.

And there are countries in that region who should be more involved, especially China, because that threat -- intercontinental ballistic missiles is a threat when you are talking about the United States. There are delivery mechanisms for certain warfare closer to home for North Korea.

It's scary that Kim Jong-un would look at calling him a maniac as a compliment. For him to be able to have nuclear capability that threatens the U.S. shores is something that absolutely cannot happen.

BLITZER: How do you think Kim Jong-un, the leader of North Korea, he reacts to a statement like this by Donald Trump?

ZELDIN: But it's actually the president-elect is right. You can't allow North Korea to get their hands on nuclear weapons. And it's not that the president-elect, in his tweet, was making fun of Kim Jong-un and trying to provoke.

He is saying what really should be American foreign policy and has been American foreign policy, is that we cannot allow Kim Jong-un to have his hands on a nuclear weapon.

BLITZER: Yes. I wonder what he is talking about with when it won't happen, a preemptive strike, a military strike. Who knows what could happen on the Korean Peninsula in retaliation for that, given the North Korean capabilities.

But maybe he is still hopeful that China could intervene. China still has influence in North Korea. Donald Trump keeps saying he is going to rely on China to get the job done. We will see if that happens.

All right, Congressman, I need you to stand by. We have some breaking news coming into THE SITUATION ROOM right now.

The prime minister of Israel, Benjamin Netanyahu, is questioned as part of a criminal investigation into alleged corruption. Stand by. We have new details and the prime minister's reaction right after this.



BLITZER: There is breaking news out of Israel right now, where police say the prime minister, Benjamin Netanyahu, has been interrogated in a criminal investigation.

Republican Congressman Lee Zeldin is back with us. He is a member of the Foreign Affairs Committee. We will get his reaction.

I want to get the latest, though, from Jerusalem right now.

CNN's Oren Liebermann is on the story for us. Oren, tell our viewers what's going on.

OREN LIEBERMANN, CNN CORRESPONDENT: Wolf, the big news tonight is that Prime Minister Benjamin Netanyahu is officially a suspect in a criminal investigation.

Israeli police and the attorney general say Netanyahu is suspected of receiving gifts from businessmen. They won't say too much more about that at this point. They say to do so, to reveal that information would bias the investigation one way or the other.

Prime Minister Benjamin Netanyahu has responded repeatedly here, saying there will be nothing found against him and all of these accusations are false.

Let me read you part of a statement he posted on his Facebook page yesterday. "Unfortunately, you will have to be disappointed this time as well, like you were disappointed on previous affairs. As usual, there will not be anything because there is nothing. Try replacing the prime minister at the ballot box, as is customary in a democracy."

Prime Minister Benjamin Netanyahu has repeatedly reiterated the statement. There, he is referencing a criminal investigation from his first term back in the late '90s. That too started as a criminal investigation, but never led to any charges. Netanyahu was never indicted.

Now, this began about six months ago as an inquiry or an examination. There was no suspicion of a crime just yet. But the attorney general says last month there was evidence that they found that led them to believe that a crime had been committed. That led to the launching of the criminal investigation.

This evening, police investigators questioning Netanyahu for some three hours tonight -- Wolf.

BLITZER: Yes, I saw the statement that the Israeli police released. The central unit of the Israeli police interrogated tonight, under caution, the prime minister of Israel, Benjamin Netanyahu, on suspicion of allegedly receiving benefits.

That interrogation, as they call it, that went on, what, for three hours. We saw the police vehicles we saw going into the prime minister's residence. It was a three-hour "interrogation"?

LIEBERMANN: Exactly. We saw them pull in about 6:30 this evening and they were there until about 9:30.

And the words you pointed out under caution are very important in this case. Police only use those words when someone is suspected of having committed a crime. What does that mean? That means Prime Minister Benjamin Netanyahu in Israel here is a criminal suspect.

What does that mean in the big picture? What does that mean for Netanyahu's leadership of Israel? At the moment, nothing. He doesn't have to do anything until he is indicted. Even then, he may not have to resign or step down. Under Israeli law, he is allowed to stay prime minister until he is convicted of a crime and until that conviction is upheld upon appeal by the Israeli High Court.

If he is indicted of a serious crime, he may face enormous public pressure and political pressure to step down. But, Wolf, it's important to point out we are not there yet. This is the beginning of a criminal investigation. Any of the next steps, although they may happen question , they may also take weeks, months or even more than a year.

BLITZER: Oren Liebermann reporting for us from Jerusalem, Oren, thank you very much.

Let's get some reaction. Lee Zeldin is a congressman from New York, Long Island. You are a strong supporter of Israel.

You hear this report, Congressman. You're a member of the Foreign Affairs Committee. What's your reaction?

ZELDIN: Well, I would like to get more details as to exactly what the charges are, what the evidence is.

BLITZER: So far, there are no charges, but there is suspicion.

ZELDIN: And if they -- if there is any information that would allow the international community, for us as Americans, to be able to form an opinion on our own, that would be great.

We have a system here in the United States that we deeply respect and we admire. They have one in Israel that they are following, their protocols. We happen to have a prime minister who is in charge of a nation that is a great ally of the United States. And the strength of that bond between Americans and Israelis is one that is very strong.


So, we don't want to rush to judgment at all when we're talking, especially when we're talking about the prime minister of a nation that is such a strong ally. So they're following the protocol. Hopefully, nothing happened at all and we can continue to strengthen our relationship.

BLITZER: You know the former prime minister of Israel, Ehud Olmert, he is in jail right now serving 19 months after he was convicted. And I think he had to step down as prime minister of Israel. So there is a history here, if you will.

ZELDIN: Well, I sure hope that what might have been experienced in the past in their nation is not one to reflect on what is potentially being alleged here now.

BLITZER: Serious, serious situation.

All right, Lee Zeldin, thanks very much for coming in.

ZELDIN: Thank you. BLITZER: Just ahead, what Senate Democrats are threatening to do to

some of Donald Trump's top Cabinet nominees.

Plus, breaking news, the recording that is raising some new concerns about the president-elect and potential conflicts of interest.


BLITZER: Senate Democrats may move to try to delay confirmation of some of president-elect Trump's Cabinet nominees, including his picks for secretary of state and attorney general.

Our chief political correspondent, Dana Bash, has been working the story for us.

Dana, these Democrats don't actually think they can block the confirmations of the nominations, but they want to delay them.


The votes just don't add up for them to be able to actually vote to say, you know what, Rex Tillerson, for example, he will not be secretary of state.

[18:30:06] Ironically, one big reason is because the Democrats, when they were in charge of the Senate and they had a Democrat in the White House, they changed the rules so that the Republicans couldn't filibuster. Now they're living by those same rules in the minority.

So the eight people that you just saw on the screen, the Democrats are saying that they are not going to do a swift confirmation process for, because the Democrats insist that these nominees have not put enough information out there for the confirmation committee hearings, and also for the Office of Government Ethics and even, in some cases, the FBI. So they want more information, they say, to prove that there aren't conflicts of interest.

But it's no coincidence, Wolf, that the people we're talking about -- secretary of state, Rex Tillerson, that nomination; Jeff Sessions for attorney general; Tom Price for HHS secretary and, especially, even the EPA administrator -- they're all people that the Democrats strongly disagree with when it comes to their policy and what they will probably do in the Trump administration, especially someone like Tom Price, who obviously is going to take the lead on repealing Obamacare.

BLITZER: We'll see how this plays out. Dana, thank you very much. Dana Bash reporting.

Breaking news right now. A tape has emerged of President-elect Trump lavishing praise on his Dubai business partner at a New Year's Eve celebration at Trump's Florida resort, Mar-a-Lago. Our money correspondent, Cristina Alesci, has details for us.

Cristina, this really sort of underscores the concern about potential conflicts of interest once Trump is in the Oval Office. CRISTINA ALESCI, CNN MONEY CORRESPONDENT: It does, Wolf. Here's the

deal. Trump was in front of about 800 guests at Mar-a-Lago giving remarks on New Year's Eve when he praised a business partner in Dubai who owns Trump-branded golf courses. Listen.


DONALD TRUMP (R), PRESIDENT-ELECT OF THE UNITED STATES: Saying that the whole family, from the most beautiful people, from Dubai, are here tonight. And they're seeing it, and they love it.


ALESCI: Now Trump is talking about Hussain Sajwani of DAMAC Properties. Here's a little background on Trump and the Sajwani family.

The relationship started back in 2005. Sajwani built Trump International golf courses in Dubai and is working on another one designed by Tiger Woods, which will open in 2018.

Look, Wolf, Trump may not see these comments as controversial. In fact, a Trump spokeswoman downplayed the remarks, saying that there was no formal meeting or professional discussions that evening, but that is not going to fly with ethics lawyers; the ones that I spoke to anyway.

Here's why. They see it as Trump using his office to expand his existing business partnerships. And the implication there is that Trump is enriching himself.

Now, Trump has, of course, addressed possible conflicts of interest saying he's going to separate himself from the business and have his kids run it. But here's the issue with the plan, Wolf. Trump already knows who his business partners are. And as a result, he knows how a policy decision might impact them and, in turn, help or hurt Trump personally, financially, his organization.

Now, the partnership with DAMAC is particularly tricky for Trump, because he doesn't own the golf courses. So it's not like he can just sell it to alleviate himself of the conflict. He's going to have to break a licensing deal in order to avoid the conflict. And that could end up in a messy lawsuit.

So there's no simple answers to this question here, but the scrutiny over this issue will certainly continue, Wolf.

BLITZER: Cristina Alesci reporting for us.

Donald Trump says he'll have a news conference later this month to explain how he's going to deal with these potential conflicts of interest. Thanks for that.

Let's dig a little bit deeper right now with our political experts.

David Chalian, let me start with you. Is he able to really clear up this opportunity for potential conflicts of interest? Because a blind trust apparently is not necessarily going to be able to emerge from all of this.

DAVID CHALIAN, CNN POLITICAL DIRECTOR: Yes. That's not in the cards. That much the Trump folks have made clear, I think.

And so Donald Trump is going to give his best explanation to the American people as to how he's going to divide what was his life's work and his family business, now that his two sons -- adult sons will be running, versus what he's going to do in the governing sector.

And quite frankly, I just think that it is not -- it is certainly not going to be to the satisfaction of watchdogs that look at this stuff, but we will see if it is to the satisfaction of the American people. And that really is going to be the audience that Donald Trump has to convince that he is separating out his business from his governance.

BLITZER: All right. Abby Phillip, let me get to the confirmation battle that's expected to emerge this month and maybe in the weeks and months to follow. The Democrats -- and you heard Dana Bash's report -- their motivation is to effectively protest, although they're under no illusions that they'll have the votes to actually block these nominees. Is that right?

ABBY PHILLIP, "THE WASHINGTON POST": Yes, that's right. And they're going to be trying to use whatever clout that they have at the moment to drag this process on. I mean, time is -- particularly in the Senate and in the House, are not unlimited. So, for every additional day that they can add to the process of confirming one of Trump's nominees, they can force a conversation about whatever issues they want to talk about. They can just simply make it annoying for the incoming president-elect to not have his cabinet in place.

[18:35:26] You're hearing Republicans remind Democrats that, when Obama came into office, they unanimously consented to have -- to approve several of his nominees on the day of his inauguration. And I suspect that we're not going to see many of the high-profile folks sliding through here, because people like Rex Tillerson, Steve Mnuchin, Betsy Davos are very wealthy. There are troves of things that Democrats can pull out of their history, their financial dealings, and air that out for the American public and perhaps create an embarrassment for the president going into his first 100 days.

BLITZER: Ron Brownstein, Abby makes a good point. I think more than a dozen Obama nominees were sworn in on inauguration day, and a dozen more -- half a dozen more were sworn in within a week or two right afterwards. The Republicans moved pretty quickly in allowing that confirmation process to go forward, and they're asking why won't the Democrats do the same thing right now?

Is this Democratic strategy that Schumer enunciated, Chuck Schumer, the incoming Democratic leader in the Senate, is it smart?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Well, look, first of all, the record is obviously mixed on the Republican side. Elizabeth Warren is a senator, because the Republicans refused to confirm any appointee to run the Consumer Finance Protection Board under President Obama, because they didn't like the underlying Dodd-Frank law in which it was -- in which it was created. She only ran for the Senate after they denied her even a hearing, or blocked her with filibuster. Same thing, of course, with Merrick Garland, who never got a hearing in 20 -- you know, the last year of the Obama presidency.

So there's plenty of, you know, kind of dirt under the fingernails on both sides.

Look, for the Democrats, they have limited leverage here. And the question is whether they -- from their point of view, whether they can use this process to begin to drive a story.

The Trump presidency, the Trump agenda, in many ways, is offering a wish list -- with one big exception, potentially, of tariffs -- for corporate America, presented under the rubric of providing benefits for American workers. And I think, in many of these nominees, I think they are hoping to begin to drive a story that says what he promised is not what you're getting, whether it's environmental protections or consumer protections or workplace protections, being rolled back. It is a government that is delivering something different than it promised.

Whether they can make that case is something else, but this is their first, I think, chance to begin driving that narrative.

BLITZER: And supposedly -- presumably, they will. David Chalian, the Republicans in the new Senate, they'll have 52 senators, 48 for the Democrats. They need a 50, just a bare 50, because the vice president is president of the Senate. He can break a tie. So they need 50.

What are the prospects that some Republicans will bolt and join, let's assume -- and it's a big assumption -- that all the Democrats vote against someone?

CHALIAN: I find that hard to believe.

BLITZER: I do, too.

CHALIAN: I think that the -- the president's party, the president- elect, soon to be the president, his party, is going to give him his team to be able to put together. Now, that doesn't mean it goes without any comment. I mean, I do think we've heard some from Republicans on Rex Tillerson, the secretary of state nominee. I am sure we are going to hear some Republican concerns over his relationship with Putin, the overall U.S.-Russia relationship, as a part of their probing for their advice and consent.

But I have a hard time believing that you are going to see Republican senators defect from Trump on the floor over some of his nominees.

BLITZER: Let's talk about the first day or two of the new administration, Abby. You heard Sean Spicer on CNN say today that, on day one, there are going to be a lot of executive orders that President Obama signed that are going to be reversed. What are we talking about? What are some of the first initial initiatives that president -- the new president will remove?

PHILLIPS: Well, there are any number of things on the Republican wish list, many of them having to do with business regulations.

I think we can see a lot of also environmental regulations on the table. The president did some executive actions, even in the last couple of weeks, that have to do with oil drilling and protecting public lands. I imagine that Republicans are looking at some of those and trying to determine whether it makes sense to roll them back, whether there's an interest in doing that.

But I think the business community is also particularly interested in even putting in place some more proactive efforts that effectively undo the Obama legacy, having to do with how federal regulations are put forward and whether the government takes into consideration the cost of those regulation.

And also the Consumer Financial Protection Bureau. Republicans on the Hill really want that agency to be -- to have more congressional oversight and less executive oversight. So I wouldn't be surprised if they move forward with trying to rein in that agency that they have never liked from the very beginning at the -- at the very top of Donald Trump's administration.

[18:40:09] BLITZER: Deregulation, Ron Brownstein, that Donald Trump is promising. It's seen, supposedly, as one of the reasons why the Dow Jones has gone up approaching 20,000 since his election on November 8. Get rid of a lot of these regulations. The assumption is it's good for big business.

BROWNSTEIN: Right, and look, there are very different categories here. Right?

So you have executive orders by the president that, as Abby said, the president can simply -- the next president can simply undo. And there, the critical one which we have not heard much from Donald Trump lately, although he did talk about it on the campaign, is the deferred action, the DACA program for the so-called DREAMers people, young people who are brought here as undocumented immigrants by their parents. He's pledged at various points to undo that on day one. Has not talked about that lately.

But when you get beyond those executive orders, you get to proposed federal regulations. Very easy to withdraw. Federal regulations that are completed are more complicated. Things that have been completed, since roughly last May, may be subject to what's called the Congressional Review Act, which would allow Congress, by a majority vote, signed by the president, to overturn them. That's only been used once in its history, but there are a number of rules, such as requiring the overtime rule for federal -- for employers, paid leave for federal contractors, some offshore drilling rules that Republicans are eyeing for that.

And then, what looms out beyond that are things that may take even more steps. The Clean Power Plan, which is a high priority for many of the conservative groups and for the energy industry. That's the carbon emission rule. That is a completed rule, so they're going to have to go through a rule-making to undo it.

And then, of course, the big enchilada of all is repealing Obamacare, which Republicans in Congress signal that they're ready to start almost on day one.

BLITZER: Yes. They need legislative action to do that. They can't just do it through executive orders.

All right, guys. Stand by. There's a lot more coming up. We're getting new information about the suspect in the Istanbul terror attack. Was he directed by ISIS?

Plus, there's breaking news, Donald Trump responds to the disturbing New Year's message from North Korea's Kim Jong-un.


[18:45:58] BLITZER: Tonight, ISIS is claiming responsibility for the New Year's Eve shooting massacre at an Istanbul nightclub that killed 39 people.

CNN's Brian Todd is working the story for us.

Brian, the manhunt for the suspect is intensifying.

BRIAN TODD, CNN CORRESPONDENT: It is indeed intensifying, Wolf. We're told there is a massive dragnet involving hundreds of Turkish law enforcement and counterterror forces being conducted across Turkey tonight and into neighboring countries.

And just a short time ago, we got our first good images of the suspect. Turkish media outlets have published a new still photo, of this one right here, of the suspect which they say they obtained from Turkish police. We don't know when or where the photo was taken.

Then, this other image, a frame grab of surveillance video. Our affiliate CNN Turk and other media outlets obtained this from Turkish police. CNN cannot independently verify the authenticity of this frame grab.

So, at the moment, here's what you had. You got Turkish officials apparently releasing two photos of the suspect. They tell us they have his fingerprints from the scene but so far, they have not given us a name of the suspect.

There is also dramatic surveillance video of the gunman entering the nightclub. Take a look at this. He is firing as he goes in. In some frames, you can even see bullets ricocheting. This man killed 39 people inside the nightclub, wounded dozens of others. The victims were from 14 different countries, Wolf.

ISIS has claimed responsibility for this attack but it has given no clues about the identity of the gunman.

Now, terror experts tell us, if ISIS actually directed the attack, it may have been more likely to have been a martyrdom operation with the perpetrator either taking his own life or confronting police and dying in a hail of gunfire. The information that this man slipped away leads some experts to believe this might have been an ISIS-inspired attack by a man acting on his own, possibly, Wolf.

BLITZER: And, Brian, tonight, Turkish authorities, they're up against some real obstacles as they track this man, right?

TODD: They are, indeed, Wolf. Former U.S. marshals we've talked to who have taken part in many of these international manhunts, they are telling us that the porous border between Turkey and Syria is a real problem, especially in this particular search. If this guy slipped into Syria and if he is getting help inside that country, he could simply disappear. There are millions of refugees also inside Turkey. That's complicating the search.

And there is turmoil within the Turkish government. Some of the security forces and other factions of that government, they are distrustful of one another. If they are not on the same page, Wolf, finding this man will be even more difficult.

BLITZER: Certainly will be.

All right. Brian, thank you very much. Brian Todd reporting for us.

Let's bring in our experts to assess. Peter Bergen, our national security analyst.

ISIS claims responsibility, it says this killer was an ISIS soldier, but it was not a suicide mission. The guy is still out there at large right now. What's your assessment?

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Well, it's the same formulation they used in the Berlin attack in which the attacker eventually was killed by police, but it wasn't a suicide operation formally at the beginning. So, I mean, I don't -- the fact that it's not a suicide operation I don't think invalidates ISIS' claim of responsibility. It's quite likely this they inspired the attack.

BLITZER: At least inspired but directed as well?

BERGEN: I don't know, but one of the two.

BLITZER: At least inspired.

Michael Weiss, the nightclub was frequented by a lot of high-profile crowd. It was an international crowd that were celebrating New Year's Eve over there. So, was this a symbolic location that this guy was going after?

MICHAEL WEISS, CNN CONTRIBUTOR: Yes. I mean, it's in a secular neighborhood of Istanbul. You have a major holiday, which all jihadists call on each other to attack during the holiday season, their Christmas, New Year's or New Year's Eve. And this is the softest of targets.

I think he killed one police officer or one guard outside. That's not very much of a security detail whatsoever. And then, coming in, much like the shooter in the Pulse nightclub in Orlando, spraying machine gun fire into an open crowd. I mean, that is guaranteed to maximize the fatalities and the casualties.

BLITZER: General Hertling, you know, ISIS is still in control of Mosul, still in control of Raqqah, but they are losing some ground.

[18:50:02] As they lose ground in Iraq and Syria, should we anticipate more ISIS-inspired or even directed terror attacks on international targets?

LT. GEN. MARK HERTLING (RET.), U.S. ARMY: We certainly should, Wolf. And you're right, they are losing ground in Mosul specifically and in a lesser degree in Raqqah. But you still have that limited flow across the border. So, many of the ISIS fighters who usually used Istanbul to transport into Syria or Iraq are not doing that as much now.

And there are a huge number of refugee camps in Southern Turkey. So, I think that in combination with some of the changes we have seen in the Turkish government and Mr. Erdogan's approach to being a lot more authoritarian and as Brian Todd just mentioned, you have some real confusion within the intelligence, the military and security community within Turkey itself due to so many people being rolled up during the coup attempt a few months ago.

So, you're going to see Turkey continue to sustain these kinds of attacks from ISIS fighters who are remaining in their country.

BLITZER: So, Michael Weiss, you anticipate more of these kind of so- called lone wolf attacks?

WEISS: Yes. Although I have to emphasize, I don't know that this is lone wolf. Turkey has got one of the largest networks of ISIS operatives scattered throughout the country. And as the general was saying, they have sustained the most number of terror attacks of any European nation. In 2014, even before the real spike in these ISIS attacks, they had something like half a dozen or seven attacks that were carried out by members of ISIS who had either come from Syria or who were inspired and radicalized within Turkish borders.

And one of the reasons that ISIS likes to do this and not claim responsibility and this represents a sea change in their strategy vis- a-vis Turkey. They have claimed responsibility. But previously, they didn't want to claim responsibility because Turkey's instinct always, when there is an act of violence or terror is to blame the Kurdish separatist group, the PKK.

And ISIS had always wanted to drive that wedge within Turkish politics, to have Turkey exacerbate its relationship with the Kurds and go after, frankly, the Kurdish militias that are fighting ISIS on the ground, America's most reliably proxy. Now, it seems like they have changed their tactics.

BLITZER: I need everyone to stand by. We are getting some breaking news right now. Donald Trump responds to North Korea's missile threat. We have details of his Twitter message to Kim Jong-un.


[18:56:00] BLITZER: There is breaking news. Donald Trump just fired back at the North Korean leader Kim Jong-un's declaration that he is close to testing an intercontinental ballistic missile. Trump tweeted this and I'm quoting now, "North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S. It won't happen."

And a second Trump tweet just minutes ago says this, quote, "China has been taking out massive amounts of money in wealth from the U.S. in totally one-sided trade, but won't help with North Korea. Nice."

Our Pentagon correspondent Barbara Starr has been looking into the latest North Korean threat.

What are you learning, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, tonight, these threats are raising question of whether Donald Trump will be the president that has to take out North Korea's nuclear program possibly with military action. That scenario poses staggering implications.


STARR (voice-over): North Korea leader Kim Jong-un's New Year's Day message, he is almost ready to launch an intercontinental ballistic missile, an ICBM, that someday could hit the U.S.

KIM JONG UN, NORTH KOREAN LEADER (through translator): Research and development of cutting edge arms equipment is actively progressing and intercontinental ballistic missile test launch preparation is in its last stage.

STARR: A security challenge Donald Trump could face very early on. Trump has made clear on the campaign trail he wants China to deal with Kim.

DONALD TRUMP (R), PRESIDENT-ELECT: We have to be very vigilant on North Korea. We cannot let this guy go much further. And China should handle that problem.

STARR: And offering his own blunt assessment of the North Korean leader.

TRUMP: You have the guy in North Korea and he's probably crazy.

STARR: Something Donald Trump and current director of CIA appear to agree on when it comes to Kim.

JOHN BRENNAN, CIA DIRECTOR: He is delusional because he believes that the world is going to accept a nuclear North Korea and allow it to maintain that arsenal.

STARR: U.S. war plans have detailed a strike option, bombing the regime if it poses an immediate nuclear threat. But the intelligence community warns the U.S. may have few cards to play.

JAMES CLAPPER, DIRECTOR OF NATIONAL INTELLIGENCE: I think the notion of getting the North Koreans to denuclearize is probably a lost cause.

STARR: There is intelligence showing how far Kim has moved ahead.

GORDON CHANG, AUTHOR, "NUCLEAR SHOWDOWN": The North Koreans are very close to being able to make a nuclear weapon to their longest range missiles and hit the United States.

STARR: The North Koreans have already tested an intercontinental long range missile, but it had a satellite on the front end, not a warhead. And North Korea claims it's already tested a miniaturized warhead for an ICBM. U.S. officials say they can't verify that, but they have to work under the assumption it's true.

North Korea has conducted five underground nuclear tests. Another could happen at any time with little or no warning, U.S. intelligence officials say.

But North Korea has to master the technology to assure its ICBM can hit a specific target.

CHANG: They need to improve their accuracy. They need to improve their range. But they also have a pretty fearsome missile program at this particular time.


STARR: Now, two traditional strategies using China to pressure North Korea as Trump is suggesting and sanctions essentially putting more money in Kim's pocket. There is no indication at this point that Kim Jong-un is interested in either of those strategies -- Wolf.

BLITZER: Serious development indeed.

All right. Barbara, thanks very, very much.

Finally tonight, a very different note. A happy one. We want to congratulate our SITUATION ROOM producer, new father Chris dos Santos. His daughter Audriana was born this morning weighing eight pounds and measuring 20 inches. Chris says the baby and mother Sandy, they are happy and they are healthy. We send our best wishes to all of them. A great way to start the New Year.

"ERIN BURNETT OUTFRONT" starts right now.